[By NBC-1TV H. J Yook]Digital payments experts Consult Hyperion, in conjunction with the GSMA, today published a guide to help banks and mobile operators understand the Host Card Emulation (HCE) and SIM Secure Element approaches for NFC payments. The guide, “HCE and SIM Secure Element: It’s not Black and White”, follows the recent introduction of HCE into Android 4.4 (KitKat) and concludes that the SIM Secure Element and HCE approaches to NFC payments each offer important benefits for financial institutions. Further, they should not be viewed as mutually exclusive and a combination of the approaches may be appropriate for differing applications and markets.

“This paper provides a balanced analysis for financial institutions of HCE as an alternative proposition for NFC payments, alongside the existing SIM approach,” said Alex Sinclair, Chief Technology Officer, GSMA. “The recent inclusion of HCE into Android opens up the possibility of performing NFC payments without using a SIM Secure Element and HCE could also potentially remove complexity associated with SIM-based NFC payments. At the same time, SIM-based NFC offers a proven secure solution that is being commercially deployed today. The challenge for the mobile operator community is to simplify the provisioning process, further accelerating deployments of SIM-based NFC on a global basis.”

“MasterCard has been technology agnostic, enabling mobile payments in a way that allows current card accounts to be used seamlessly and securely from consumers’ favorite electronic devices,” said James Anderson, senior vice president of emerging payments, MasterCard. “We have deployed SIM and Secure Element-based solutions through partnerships with mobile network operators, OS providers and handset manufacturers, while recently adding support for cloud-based payments. This paper will help both the mobile and payments industries understand the strengths of each approach and allow them to choose the options that align with their business strategies.”

Report co-author Steve Pannifer, Head of Delivery at Consult Hyperion said: “The inclusion of HCE into Android has generated a lot of excitement that can only be good for NFC payments. This, combined with the efforts to streamline SIM Secure Element based NFC evident in many markets, will enable NFC payment products to be rolled out with renewed vigour. We hope that this paper will encourage banks and mobile operators to collaborate further in bringing NFC payments to the market. We believe the mobile operators have an important role to play, particularly in providing mobile security and authentication services that are paramount in any payments service.”